1. www.concordcoalition.org THE CONCORD COALITION presented by Robert L. Bixby, Executive Director THE CONCORD COALITION www.concordcoalition.org Fiscal Solutions Tour: The Challenges Ahead

2. www.concordcoalition.org THE CONCORD COALITION Estate & Gift Taxes ($21 billion) Composition of Projected FY 2010 Federal Government Revenues and Outlays (Deficit: $1.34 Trillion) Interest Domestic* Social Security Medicare & Medicaid Other Entitlements Defense Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes Outlays: $3.49 trillionRevenue: $2.14 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO August 2010.

3. www.concordcoalition.org THE CONCORD COALITION Current Policy Trends Lead to Large Sustained Deficits Fiscal Years 2011-2020 CBO August 2010 Baseline The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, that Medicare physician payment cuts are postponed, and that all expiring tax provisions (including those from the 2009 stimulus package) are extended with AMT relief. Source: Congressional Budget Office, August 2010 and Concord Coalition analysis. Billions of Dollars -$15.2 Trillion Deficit -$6.2 Trillion Deficit

4. www.concordcoalition.org THE CONCORD COALITION  CBO August 2010 Baseline CBO’s Estimate of the President’s Budget Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2020) CBO August Baseline Compared to the President’s Budget Source: Congressional Budget Office, August 2010.. Average outlays: 21.0% Average revenues: 18.3% Percentage of GDP ActualProjected

5. www.concordcoalition.org THE CONCORD COALITION Percent of Debt Held by the Public Owned by Foreigners (1987-2010) Source: United States Treasury Department, Treasury Bulletin, September 2010. Percentage of Ownership of Publicly-Held Debt

6. www.concordcoalition.org THE CONCORD COALITION Interest Costs Go Through The Roof Source: Congressional Budget Office August 2010 and CBO’s Analysis of the President’s Budget, March 2010. Billions of Dollars

7. www.concordcoalition.org THE CONCORD COALITION Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security Source: Congressional Budget Office, June 2010. Percent of Growth Attributed to:20352080 Health Care Cost Growth37%56% Aging63%44%

8. www.concordcoalition.org THE CONCORD COALITION Debt Held by the Public as a Percent of GDP 1940-2040 Source: GAO Analysis, 2010 and OMB Historical Tables 2010. As a Percentage of GDP ActualProjected World War II 108.6% 2010 63.6%

9. www.concordcoalition.org THE CONCORD COALITION 62%31% 7% 40% 15% 45%39% 6% 55% MandatoryDiscretionaryNet Interest Source: Congressional Budget Office, August 2010. Mandatory spending is consuming a growing share of the budget 197019902010

10. www.concordcoalition.org THE CONCORD COALITION Outlays of Select Non-Defense Discretionary Programs (FY 2010 Projected) Source: Congressional Budget Office, January 2010. *includes ground, air, and water Education Transportation Housing, Natural VeteransForeign Aid General Science, Energy & Resources Government Space & Nutrition Asst.Technology

11. www.concordcoalition.org THE CONCORD COALITION Non-Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, August 2010. As a Percentage of GDP

12. www.concordcoalition.org THE CONCORD COALITION Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, August 2010. As a Percentage of GDP

13. www.concordcoalition.org THE CONCORD COALITION Sources of Growth in the Federal Budget Over the Next 30 Years Source: Government Accountability Office and Congressional Budget Office. 2010. Individual Income Taxes = 6.5% Current Defense Spending = 4.7%

14. www.concordcoalition.org THE CONCORD COALITION Shortcomings of the Current System There is no fiscal goal PAYGO has large and confusing exemptions PAYGO does not apply to automatic spending growth Annual appropriations have no enforceable cap Long-term costs are not accounted for Inadequate oversight

15. www.concordcoalition.org THE CONCORD COALITION Possible Changes Set a fiscal goal such as debt-to-GDP ratio Eliminate PAYGO exemptions Set targets for major entitlement programs enforced by automatic triggers Set multi-year enforceable spending caps Require long-term cost estimates in the budget resolution and for major initiatives Adopt biennial budgeting and/or “base closing” approach